This is Barry mold still getting small business and stuff you want to talk about money. You want to talk about cash Soto I, let's talk about the cash crunch that exists inside your business that's keeping you stuck. There's a great small business joke that says, you know, as a small business owner, I sleep like a baby. I go to bed at seven o'clock at night I wake up at midnight screaming my head off. Now, does that sound familiar? This is why you're stuck.

You're constantly worried about cash. You don't review your monthly financial statements. So you have absolutely no idea what's really going on. In fact, you're afraid to read your financial statements because you just don't understand it. You are facing a fiscal cliff that is going to get you in the end. Now.

How do we get here? your expenses exceed your income, and you don't even know it. Your prices are too low or you offer too many discounts and you don't even know it. You have too much overhead, you pay your bills way too early. You don't do a good job at collecting your receivables. And you outsource all this financial knowledge that you're trusting other people to tell you exactly what is going on.

For me, managing the finances in my business is really personal. Because when I sold my last business, I lost a million dollars in the sale of that business because I could read my financial statements. Now don't feel bad for me, because I actually had a degree from Northwestern University in finance and marketing and I couldn't do it. Remember what businesses are really about are not revenue. It's really all about cash flow. I remember in the 80s when President Clinton ran the first time for office, his campaign manager in his little rock headquarters hung up sign that said, it's the economy stupid.

And ever since then every single one of my businesses I've ever run, I have an assignment says it's cashflow stupid, because that is really what business is about. You can't pay your employees, you can't take profit in terms of revenue or accounts receivable only in cash, you got to remember that cash is not only King, but it's every other face card in the deck that is more important than profits. There's a great saying that says sales is vanity. Cash Flow is sanity. I don't care how big your company is. I want to know how much cash you get to keep at the end of the month.

And what you do for increasing cash is very important. I remember I used to get a bill every single month from ADT for my home security system, and they used to build me $33 a month. But a couple of years ago, they sent me a new bill at the beginning of a quarter and they said for my convenience, they were now going to build me one quarter in advance every three months. So I'd have to pay a bill to them every single month. I thought for a second, whose convenience was that for it was for their cash flow, then improve their cash flow by two months. As a business owner, you have to think about how do you make money?

What is your basic revenue model? does it increase because you have more customers? Do you really need more revenue per customer? Is it important to get your cost of service down your cost of sales down? What does it cost to acquire a customer? What is the lifetime value of the customer and what does it cost to actually develop a product.

Remember, if you are an explosively growing company, it's going to suck cash out of your business because receivables are going to go up, inventory is going to go up and your working capital requirements are Going to go up. Think about where is the leverage when you grow your business isn't in the people, most consulting companies, they make money as they hire additional people and build them out. So for example, if I pay someone $20 an hour, but I build them out at $50 an hour, I can grow my business, if my fixed costs stay the same, and I hire more people, is the leverage in your product like video games, where I spend a lot of money developing the initial game, but then I sell it for a cost of goods of almost nothing through downloads or through a CD. Is it in your intellectual property where you were the first to market and no one else is going to be able to challenge challenge you?

Is it in distribution where you've locked down how people are gonna distribute your products so competitors can't get in there? Is it in a new cities, like your smartphone, where the initial purchase is very cheap, but the barrier to exit is really high and people pay You the same amount of money over and over again every single month. Think about the one area where you're stuck. And the following videos we're going to talk about solutions to get you unstuck. Great